2 Reasons Why the PC Dies by 2020

Zero-maintenance computers such as the Chromebook will kill the PC and Windows within 10 years, delivering a punch to the solar plexus of Microsoft's (Nasdaq: MSFT  ) core Windows business. Apple's (Nasdaq: AAPL  ) Mac business is no safer, while Red Hat (NYSE: RHT  ) should continue as it has, since much of its operating system software powers servers.

Sound crazy? Maybe it is, but Google's (Nasdaq: GOOG  ) plan to outfit businesses with low-cost, zero-maintenance Chromebooks shows signs of a classic technology disruption. Here's a closer look at the two most important factors.

1. The rise of on-demand models
Consider all the ways you consume on-demand computing without even thinking about it:

And that's just a sampling. I'm not even counting Sony's (NYSE: SNE  ) PlayStation Network, so popular that recent outages resulted in a global uproar. There's also Facebook to consider. More than 600 million people associate themselves with the site. Of that, I'd guess 100 million spend at least four days of every month glued to The Social Network. As consumers, our attitudes have changed. We're consumed with consumption of Web services.

Corporately, IDC estimates that the market for business services delivered via the public cloud will grow from $16 billion last year to $56 billion by 2014. Others say the market will expand to be worth more than $100 billion before the end of that year. Either way, IT departments are committing more funds to deploying software via the Web.

2. Start-ups starting without infrastructure
Venture capitalists appear to be equally bullish on cloud computing. More than once during my recent trip to Silicon Valley with Motley Fool Rule Breakers teammate Karl Thiel, I heard entrepreneurs and corporate insiders talking of how VCs are demanding that portfolio companies run operations in the cloud.

I can't be sure this is broad policy among Silicon Valley venture capital firms, but the stories ring true, if only for efficiency's sake. Subscription models cost less up front, leaving plenty of capital to hire coders and a sales team. Start-ups that produce more also sell more, and in the process position themselves for IPOs and buyouts. So even if there isn't a broad policy, it makes sense for entrepreneurs to go as light as possible.

Now imagine what happens when the handful of these companies that are going to be successful actually succeed. Will they abandon the cloud? I doubt it. If anything, they'll enhance their cloud infrastructure with some in-house gear and maybe some custom software, but even then, it'll be building from the outside in, rather than the reverse.

Meet your new best friend, the browser
Each trend points toward a browser-based, Chromebook-friendly future that prizes zero-maintenance computing for users, and places the IT burden on data-center operators and software developers. The resulting shift stands to alter the entire computing value chain, not to mention long-standing pricing models.

You can imagine Google cheering this idea. Apple is also preparing for this future via iOS devices. But Microsoft, Adobe (Nasdaq: ADBE  ) , and other PC-dependent software makers who like big-ticket sales, are banking the future they're banking on.

Yet what can they do? There will always be software to buy and computers to own, but now that CFOs have proven willing to rent rather than buy infrastructure, it's only a matter of time before the PC gets shoved out Corporate America's back door.

Do you agree? Disagree? Let us know what you think about the future of the PC, cloud computing pricing models, and Google's strategy using the comments box below.

Want to read more about Google and the Chromebook? Add the stock to My Watchlist to get all of our Foolish analysis.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 24, 2011, at 11:28 AM, Gonzhouse wrote:

    The day I look forward to is not only the cloud-based PC day but the day cloud services take out the cable TV services. That will be something to cheer about.

  • Report this Comment On May 24, 2011, at 11:51 AM, David369 wrote:

    Gonzhouse,

    I agree with that. Bound to happen. Imagine the possibilities. Want to see the latest CSI, don't need to wait until 8 or 9 , start watching at 7:40 if you want. Would there still be a need for TIVO or DVRs?

  • Report this Comment On May 24, 2011, at 11:58 AM, Klippenstein wrote:

    The PC and/or Mac is today's version of a general purpose computer. IBM's mainframe was the 1970s, 1980s version and its death was predicated forthe last 30 years. IBM with its mainframe and related integration services is still alive and well in datacenters all over the world. Like the mainframe, when the PC "dies," it will still remain an important part of computing world wide. Its death too will, as they say, be greatly exagerated. I for my part will likely use PCs for decades to come. I love the general purpose computer and avoid spending money on these throwaway special purpose devices. I rather save the money and invest it for my own financial gain. My PC is a phone, email machine,wiindow to the world via internet browser, Excel and Word processing machine, archive for articles of interest, store for photographs and videos, etc. Whats more it comes in a netbook form factor and cost me only $399 some years ago AND I avoid App clutter by just using "one client" (the browser") to do the dozens of things people are now looking to "apps" to do. When I have needed support Microsoft has given it to me for free. Its the only PC/computing device I use. Its the best value going. I use it ALL the time. The best thing I ever did was switch from a lifetime of using Macs to using a PC with Windows XP in 2001. If I had not, I would have had to pay at least 3x what I paid for today's computing power. I love this machine. You could almost say I AM A PC The PC is dead. Long live the PC!

  • Report this Comment On May 24, 2011, at 12:07 PM, CluckChicken wrote:

    I can see more use of 'on-demand' software but I still see an issue around data security and especially data ownership. I am not sure how many businesses will be happy to store what they consider trade secrets on another company's servers who may also be storing a competitor’s data. Picture what could happen to a Pharma if one of their competitor’s gained access to their research data through some careless intern’s error.

    Personally there is a limit to how much I would like to see in this format because I really do not want to be paying a monthly fee of $5 for some software that once cost me $30 because I use it maybe 7 times a year.

  • Report this Comment On May 24, 2011, at 4:55 PM, DefunctAcct wrote:

    This article takes such a broad and ill-informed stance, it is hard to start but I will try.

    Usage trumps technology. An Operating System means nothing if it is not usable. An OS means little if it does not address the needs of its users. In order for one OS to "kill off" any other OS requires that the OS is capable of addressing "ALL needs" of all computer users. No such OS exists today and that OS will not exist 20 years from now.

    ChromeOS is just one OS. Its design goal is to integrates the internet seamlessly into its UI. It claims a design that integrates security and network connections into its system layer. The end goal is so that users can seamlessly use online tools and store files online and be able to access them from wherever they are, whenever they wish, as long as there is a connection.

    What must an OS do? It must properly manage the hardware resources available on a specific hardware platform. The code, after all, must still run on the hardware sitting on my lap or my desk. Something has to operate that hardware. So moving to the "cloud" does not obviate the need for a capable localized OS on a single box.

    What will people do 20 years from now? COnsuming? Producing? If producing, what will they be producing? If consuming, what will they be consuming? How will they be producing and how will they be consuming?

    I foresee a revolutionary advance in UI design so that people will use computer to perform more tasks more naturally and more intelligently and more efficiently.

    A piece of hardware then must know how to handle parallel threads and processes and IPC strategies must evolve and new techniques must be invented to handle data latency issue and data access issue as multiple tools running in parallel need to access the same data.

    There is also the challenge of collaborative work where an army of users collaborate on a single project. Not only must the net be of significantly higher speed (using frequency specific laser transmission and fourier decoding), each platform must also be individually powerful enough to render the graphics, video and handle a plethora of new UI elements and Human-Machine interactive strategies.

    In addition to laptop, tablet, desktop and servers, new devices will come online that are more powerful and more capable than the iPad or the Xoom today. Usage patterns will dictate not only support for enterprise type collaboration but consumers too will demand collaborative support both locally (within a home) or over the net.

    With the increasing power of multiple core CPU, what was once impossible is now already in the works.

    Twenty years from now, the OS landscape will be mightily different because of hardware capabilities and software advances and the associated evolution in usage patterns. Each one feeding on the other.

    Does ChromeOS account for ALL OF THESE?

    Does the author of this article ASSume that OS/X and Windows will simply sit still for 20 years?

    Can we ASSume that OS/X is currently incapable of being enhanced to be internet-aware?

    I have had two opportunities to work on OS earlier in my career and my experience says that OS/X can be architecturally transformed to make the internet seamless for a user. It will not be easy and nothing worthy is ever easy but it can be done.

    Twenty years from now, ChromeOS may not exist because of other advances either within Google or somewhere else, has the author consider that?

    Lastly, the author failed to analyze the business model.

    How much must one pay for one such "maintenance free" PC?

    How much must one pay for a laptop or a tablet today?

    How much is the lifetime cost?

    How much can one accomplish on the "ChromeBook" versus a laptop, tablet or even a desktop?

    While Chromebook can certainly find its niche but to call it capable of "killing off" Microsoft Windows? Or even OS/X? 20 years hence?

    A bit premature at best? At worst....

  • Report this Comment On May 25, 2011, at 3:30 AM, glrecordings wrote:

    This article is silly. Reminds me of 'who will ever need more than 640Kb' or 'The internet is a fad'.

    The PC is here to stay for many many more years.

  • Report this Comment On May 25, 2011, at 11:00 AM, pjmaroun wrote:

    This article also fails to mention how Microsoft has done a complete pivot into the cloud and cloud-based services.. They are not standing still and are ahead of the game (with regards to cloud computing) in many cases.

  • Report this Comment On June 29, 2011, at 9:16 PM, JustARegularGuy wrote:

    Can you take it (Cloud computing) on a train? Maybe

    Can you take it on a plane? No

    Can you use it for programing? No

    Can you use it for complicated spreadhsheets? No

    databases? No

    No - the netbook didn't do it. People still need local access for complicated programs. It might be good for kids or students who don't program, but IT will always need local drives and access for database, spreedsheets, budgets, etc.

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